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Comex gold settles with pared gains

NEW YORK: Comex gold settled with pared gains Wednesday, unable to sustain an early rally that traders attributed largely to short covering ahead of the holiday weekend.

Comex will be closed Good Friday and many overseas markets will close Easter Monday as well. Several players will also be absent for the Passover holiday, which begins this evening. June gold settled $0.20 firmer at $396.80 an ounce, traded from $398.30 to $396.30. Volume was estimated at 43,000 lots, including 6,856 switches, up from Tuesday's official 29,628. Dealers quoted bullion at $393.90/$394.20.

Gold prices settled in the plus column today for the first time in six sessions, spurring optimism that the market had stabilized and would work its way higher after the recent shake-out of speculative long positions.

Trade was expected to be thin Thursday ahead of the Easter holiday. Traders saw the recent tumble in the South African rand as a double-edged sword for the gold market.

The rand fell today to a new all-time low of 4.14 bid against the dollar. Market sources noted that, in the short term, the structure of some South African producer hedges forces dealers there to buy gold as the rand weakens, although in the longer term the weaker rand will raise the rand-denominated price of gold and thus encourage further selling out of South Africa.

The market appeared to show little interest in a rally today in the KR-CRB index of commodity futures to new 7-1/2 year highs, lifted by a strong rally in corn and other agricultural products that added to gains earlier in the week in the petroleum complex. Gold equities also rallied strongly today, with the XAU index of North American mining shares surging 4.35 to 146.94, although this rally also proved unsustainable and the index retraced to close at 144.95.

SILVER

Comex silver settled barely firmer on Wednesday, as fund selling pulled the market lower from one-week highs hit during an early rally, traders said.

Traders were encouraged, however, that the May contract has been able to hold above support at $5.48 an ounce since touching that level during a selloff last Thursday.

Activity was also noted in the spreads today, with one player seen buying the July contract and selling September.

May silver settled 0.5 cent firmer at $5.522 an ounce, traded from $5.59 to $5.495. Volume was estimated at 29,000 lots, including 5,524 switches, up from Tuesday's 20,813.

Comex silver warehouse stocks rose marginally Wednesday by 288,582 ounces to 139,457,100, although they were still hovering near 9-1/2-year lows hit at the beginning of the week.

Traders expected trade to be thin Thursday ahead of the Easter holiday. Comex will be closed Good Friday and many overseas markets will shut for Easter Monday as well. Several players were also expected to be absent during the Passover holiday, which begins Wednesday evening.

PLATINUM

NYMEX platinum settled barely firmer on Wednesday, retracing from its early highs in line with a retracement in the other precious metals, traders said.

July platinum settled $0.70 firmer at $409.60 an ounce, traded from $411.50 to $409.00, a range set early. Volume was moderate at an estimated 2,241 lots, down from Tuesday's official 2,789. The premium to June gold widened slightly to $12.80, up $0.50.

The spread has recovered modestly since slipping at the end of last week into the key $10-$11 support area. June palladium was off $0.15 at $142.00 an ounce. Traders expected trade to be thin Thursday ahead of the Easter holiday.

NYMEX will be closed Good Friday and many overseas markets will shut for Easter Monday as well. Several players were also expected to be absent during the Passover holiday, which begins Wednesday evening.-Reuter